Comment on the shape of PPC based on the following schedule and also find out marginal opportunity cost (MOC)
Dear Student,
The given diagram shows all the production possibilities given in the table. Points on the curves indicates that there is fuller utilization of resources. Point inside the curve indicates underutilisation of resources and Any Pint above the curve indicates unattainable combination, which can be attain with increase in the level of production or improvement in the technology with respect to both goods A and B.
PPC is concave shaped because of increasing marginal rate of transformation That is, as more and more units of one commodity are sacrificed to gain an additional unit of another commodity.
Marginal Opportunity Cost refer to the number of units of a commodity sacrificed to gain one additional unit of another commodity.Increasing MOC operates because productivity and efficiency of factor of production decrease as they are shifted from one use to another.
Regards
The given diagram shows all the production possibilities given in the table. Points on the curves indicates that there is fuller utilization of resources. Point inside the curve indicates underutilisation of resources and Any Pint above the curve indicates unattainable combination, which can be attain with increase in the level of production or improvement in the technology with respect to both goods A and B.
PPC is concave shaped because of increasing marginal rate of transformation That is, as more and more units of one commodity are sacrificed to gain an additional unit of another commodity.
Marginal Opportunity Cost refer to the number of units of a commodity sacrificed to gain one additional unit of another commodity.Increasing MOC operates because productivity and efficiency of factor of production decrease as they are shifted from one use to another.
Regards